Economic Update September 2021
Summary
COVID caution
Many advanced economies are close to ‘peak rebound’ from pandemic driven recessions, with the tailwinds of expansionary fiscal and monetary policy set to fade and supply constraints posing a headwind to future growth. Equity markets
remain cautiously optimistic, but bond markets are more circumspect. The rapid spread of the Delta variant poses downside risks to the outlook, with even highly-vaccinated countries being severely impacted.
G4 CENTRAL BANK BALANCE SHEETS
Peak QE is coming but how to unwind?

Source: IFM Investors, US Federal Reserve, BoJ,
BoE, ECB, Macrobond. As at 1/9/2021
The G4 economies (US, UK, Japan, Eurozone) alone have added US$9 trillion to their balance sheets over the course of the pandemic, equivalent to 130% of their combined GDP. How this is unwound and the impact it will have on economies and markets
is likely to shape prospects in the coming year. However, any increase in policy rates is still a long way off in the US – likely in late 2022 or into 2023.
Australia has again been hit by significant restrictions on activity to address the spread of the highly transmissible Delta variant. Fortunately, June quarter GDP came in better than expected and demonstrated the momentum the economy had leading
into the current lockdowns. Should economic restrictions be lifted in the fourth quarter, it appears a technical recession (using the narrow definition of two consecutive quarters of negative growth) will be avoided.
About the author
Chief Economist
Alex Joiner, PhD
Joined in 2016
Bachelor of Economics (Hons) (Latrobe University), PhD (Econometrics) (Monash University).
Alex is IFM Investors’ Chief Economist and has more than a decade of experience in the field. He is responsible for the firm’s economic, financial market and policy analysis and forecasting. Alex is also a member of the firm’s Investment Committee. Prior to joining IFM Investors, Alex was the Australian Chief Economist for Bank of America Merrill Lynch. In this role, Alex was responsible for providing economic insight and forecasts across asset classes and conveying these views to both domestic and global investors. Alex was also previously a Senior Economist at the ANZ Bank.
About the author
Economist
Frans van den Bogaerde, CFA
Joined in 2019
Frans supports the Chief Economist with the firm’s economic, financial market, and policy analysis and forecasting. He holds a Bachelor of Commerce (Finance & Economics) with Honours in Finance (First Class) from the University of Melbourne. Prior to joining IFM Investors Frans was undertaking his Honours degree and was a researcher with the Brain Mind and Markets Lab at the University of Melbourne.